Sheer frustration has led 15 aged care providers in Otago
voice their concerns about a lack of funding as the industry
faces the ‘‘perfect storm'' of cost increases.
The informal group of rest-homes from Dunedin, Mosgiel,
Milton, Wanaka, Alexandra and Oamaru has written an open
letter of protest to the Southern District Health Board and
the Government over the 1% increase in funding they received
this year, following an increase of 0.89% last year.
New Zealand Aged Care Association Otago, Southland board
representative Malcolm Hendry, chief executive of Chatsford
and Birchleigh rest-homes, said the issue came to a head when
the rest-homes realised they risked losing all their funding
if they failed to sign the contract for the 1% increase.
They decided to write the open letter and send it with their
contracts signalling they did not find the increase
‘‘It was sheer frustration. It's squeezing providers in a
situation they have no ability to control.''
As a result, some residential care providers could go out of
business, he said.
The Government, through the district health boards, allocates
funding each year to residential care provides and stipulates
how much a provider can charge a resident. In Otago the daily
rate was about $120, Mr Hendry said.
In the past year, rest-home providers had faced increased
costs in KiwiSaver employer contributions and the minimum
wage and increasing insurance premiums. The 1% increase did
not go any way towards meeting all those costs, leaving them
to continue to provide the same level of care on a reduced
income, he said.
They chose to publish the letter in the Otago Daily Times
because they wanted the wider public to be aware of what was
happening in the sector.
The Government needed the residential careproviders to take
the load off public hospital system, he said.
Associate Health Minister Jo Goodhew said the Government had
increased funding for aged care faster than it had increased
overall health spending.
District Health Board funding of aged residential care
increased by 25% between 2008-09 and 2012-13, while the
overall increase in health expenditure during this time was
The Southern District Health Board could not comment last